As there are many IPO's flodding into the market recent times, thought of discussing some useful tips to be considered while going for any IPO.
Below are some of the points
-Objective of IPO
-Fundamentals of the Company
-Current Market Trend
-Ability to withstand
-Banker's History
let us discuss the above points in detail.
Objective of IPO
Firstly we need to concentrate the purpose of the company for going public and where they are using the amount come from IPO, because the future of the company depends on what it is going to do in future. We can expect the growth of the company. For an example, if a company is using the amount to develop its infrastructure or business expansion then we can expect a good growth of that share. Else if it is investing in any other non productive areas then there are less chances of our share to increase.
Fundamentals of the Company
Company fundamentals is an important factor to be considered. the stronger the fundamentals are, then the strongest is the company. Fundamentals like Assets,liabilities, Profit and Loss statements history can constitute the list of fundamentals. A company with strong fundamentals can be listed at a price more than the quoted price in offer. And also can be oversubscribed from demand coming from Investors. Such companies can definitely bring good results for an investor.
Current Market Trend
We have to analyse the current market trend as it would play an important in demand from investors and listing price. If the market has hitted with a major IPO recently, then most of the investors might have invested in that blocking a large capital and further enabling very less number of investors to turn up for new IPO. Hence there would not be much demand and the price may be low at the time of listing.
Ability to Withstand
We should assess ourselves before going to invest in an IPO as this would block the amount and even after listing if it doesn't yield anticipated returns or listed very low than the quoted price we should be able to sustain. So be prepared to face any unanticipated risk ahead before investing in any IPO.
Banker's history
Merchant Banker who is involved in IPO can also be considered. Previous IPO brought up, respective company's current position etc. Good bankers can bring up good companies and also ensure proper liquidity so that all the shares issued are bought.
This is based on my know-how, personal experience and analysis.
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| Author: harika naidu 24 Dec 2010 | Member Level: Gold Points : 1 |
A very good analysis made indeed. This is very useful for budding enterpreneurs.
The market trend plays a major role and we must keep in view the demand
Actually im not good at business but would like to know more about investment in shares etc
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| Author: RAJESH.R 21 May 2011 | Member Level: Bronze Points : 1 |
Hi sir,
It is a very good article about Initial Public offer. Nobody knows it. so it is very useful to all members who read the article. I am investing in shares so i loved it.
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